Solution Manual for Managerial Accounting,
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
Chapter One: Managerial Accounting and Cost Concepts
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
Chapter Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
Chapter Eight: Master Budgeting
Chapter Nine: Flexible Budgets and Performance Analysis
Chapter Ten: Standard Costs and Variances
Chapter Eleven: Responsibility Accounting Systems
Chapter Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key to Decision Making
Chapter Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement of Cash Flows
Chapter Sixteen: Financial Statement Analysis
,Chapter 1
Managerial Accounting and Cost Concepts
Questions
1-1 The three major types of product costs 1-4
in a manufacturing company are direct a. Variable jcost: jThe jvariable jcost jper junit
materials, direct labor, and manufacturing jis jconstant, jbut jtotal jvariable jcost
overhead. jchanges jin jdirect jproportion jto jchanges
jin jvolume.
1-2 b. Fixed jcost: jThe jtotal jfixed jcost jis
a. Direct materials are an integral part of a jconstant jwithin jthe jrelevant jrange. jThe
finished product and their costs can be javerage jfixed jcost jper junit jvaries
conveniently traced to it. jinversely jwith jchanges j in jvolume.
b. Indirect materials are generally small c. Mixed jcost: jA jmixed jcost jcontains
items of material such as glue and nails. They jboth jvariable jand jfixed jcost
may be an integral part of a finished product but jelements.
their costs can be traced to the product only at
great cost or inconvenience. 1-5
c. Direct labor consists of labor costs that a. Unit jfixed jcosts jdecrease jas jthe jactivity
can be easily traced to particular products. jlevel jincreases.
Direct labor is also called ―touch labor.‖ b. Unit jvariable jcosts jremain jconstant jas
d. Indirect labor consists of the labor costs jthe jactivity jlevel jincreases.
of janitors, supervisors, materials handlers, and c. Total jfixed jcosts jremain jconstant jas
other factory workers that cannot be jthe jactivity jlevel jincreases.
conveniently traced to particular products. d. Total jvariable jcosts jincrease jas jthe
These labor costs are incurred to support jactivity jlevel jincreases.
production, but the workers involved do not
directly work on the product. 1-6
e. Manufacturing overhead includes all a. Cost jbehavior: jCost jbehavior jrefers jto
manufacturing costs except direct materials and jthe jway jin jwhich jcosts jchange jin
direct labor. Consequently, manufacturing jresponse jto jchanges jin ja jmeasure jof
overhead includes indirect materials and indirect jactivity jsuch jas jsales jvolume, jproduction
labor as well as other manufacturing costs. jvolume, jor jorders jprocessed.
b. Relevant jrange: jThe jrelevant jrange jis
1-3 A jproduct jcost jis jany jcost jinvolved jin jthe jrange jof jactivity jwithin jwhich
jpurchasing jor jmanufacturing jgoods. jIn jthe jassumptions jabout jvariable jand jfixed
jcase jof jmanufactured jgoods, jthese jcosts jcost jbehavior jare jvalid.
jconsist jof jdirect jmaterials, jdirect jlabor, jand
jmanufacturing joverhead. jA jperiod jcost jis ja 1-7 An jactivity jbase jis ja jmeasure jof
jcost jthat jis jtaken jdirectly jto jthe jincome jwhatever jcauses jthe jincurrence jof ja
jstatement jas jan jexpense jin jthe jperiod jin jvariable jcost. jExamples jof jactivity jbases
jwhich jit jis jincurred. jinclude junits jproduced, junits jsold, jletters
jtyped, jbeds jin ja jhospital, jmeals jserved jin
ja jcafe, jservice jcalls jmade, jetc.
, 1-8 The jlinear jassumption jis jreasonably
jvalid jproviding jthat jthe jcost jformula jis jused
jonly jwithin jthe jrelevant jrange.
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
Chapter One: Managerial Accounting and Cost Concepts
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
Chapter Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
Chapter Eight: Master Budgeting
Chapter Nine: Flexible Budgets and Performance Analysis
Chapter Ten: Standard Costs and Variances
Chapter Eleven: Responsibility Accounting Systems
Chapter Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key to Decision Making
Chapter Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement of Cash Flows
Chapter Sixteen: Financial Statement Analysis
,Chapter 1
Managerial Accounting and Cost Concepts
Questions
1-1 The three major types of product costs 1-4
in a manufacturing company are direct a. Variable jcost: jThe jvariable jcost jper junit
materials, direct labor, and manufacturing jis jconstant, jbut jtotal jvariable jcost
overhead. jchanges jin jdirect jproportion jto jchanges
jin jvolume.
1-2 b. Fixed jcost: jThe jtotal jfixed jcost jis
a. Direct materials are an integral part of a jconstant jwithin jthe jrelevant jrange. jThe
finished product and their costs can be javerage jfixed jcost jper junit jvaries
conveniently traced to it. jinversely jwith jchanges j in jvolume.
b. Indirect materials are generally small c. Mixed jcost: jA jmixed jcost jcontains
items of material such as glue and nails. They jboth jvariable jand jfixed jcost
may be an integral part of a finished product but jelements.
their costs can be traced to the product only at
great cost or inconvenience. 1-5
c. Direct labor consists of labor costs that a. Unit jfixed jcosts jdecrease jas jthe jactivity
can be easily traced to particular products. jlevel jincreases.
Direct labor is also called ―touch labor.‖ b. Unit jvariable jcosts jremain jconstant jas
d. Indirect labor consists of the labor costs jthe jactivity jlevel jincreases.
of janitors, supervisors, materials handlers, and c. Total jfixed jcosts jremain jconstant jas
other factory workers that cannot be jthe jactivity jlevel jincreases.
conveniently traced to particular products. d. Total jvariable jcosts jincrease jas jthe
These labor costs are incurred to support jactivity jlevel jincreases.
production, but the workers involved do not
directly work on the product. 1-6
e. Manufacturing overhead includes all a. Cost jbehavior: jCost jbehavior jrefers jto
manufacturing costs except direct materials and jthe jway jin jwhich jcosts jchange jin
direct labor. Consequently, manufacturing jresponse jto jchanges jin ja jmeasure jof
overhead includes indirect materials and indirect jactivity jsuch jas jsales jvolume, jproduction
labor as well as other manufacturing costs. jvolume, jor jorders jprocessed.
b. Relevant jrange: jThe jrelevant jrange jis
1-3 A jproduct jcost jis jany jcost jinvolved jin jthe jrange jof jactivity jwithin jwhich
jpurchasing jor jmanufacturing jgoods. jIn jthe jassumptions jabout jvariable jand jfixed
jcase jof jmanufactured jgoods, jthese jcosts jcost jbehavior jare jvalid.
jconsist jof jdirect jmaterials, jdirect jlabor, jand
jmanufacturing joverhead. jA jperiod jcost jis ja 1-7 An jactivity jbase jis ja jmeasure jof
jcost jthat jis jtaken jdirectly jto jthe jincome jwhatever jcauses jthe jincurrence jof ja
jstatement jas jan jexpense jin jthe jperiod jin jvariable jcost. jExamples jof jactivity jbases
jwhich jit jis jincurred. jinclude junits jproduced, junits jsold, jletters
jtyped, jbeds jin ja jhospital, jmeals jserved jin
ja jcafe, jservice jcalls jmade, jetc.
, 1-8 The jlinear jassumption jis jreasonably
jvalid jproviding jthat jthe jcost jformula jis jused
jonly jwithin jthe jrelevant jrange.
